The Platts pre-report analyst survey of EIA/API estimates suggests a build of 3.5 million barrels in US oil stocks
Platts Survey of Analysts
- Crude oil stocks up 3.5 million barrels
- Gasoline stocks down 1 million barrels
- Distillates stocks down 1.5 million barrels
- Refinery utilization or run rate down 0.25 percentage points at 81.35%
New York, NY - February 17, 2009
Analysts expect a 3.5 million-barrel build in US commercial crude oil stocks to be reflected in this week's oil inventory data from the US Energy Information Administration (EIA) and the American Petroleum Institute (API), a Platts survey showed Tuesday.
The API is due to release its data at 4:30 pm EST Wednesday, one day later than usual due to Monday's President's Day holiday. The EIA will release its survey at 10:30 am EST Thursday for the week ended February 13.
After rising to a fresh record high of nearly 35 million barrels, oil inventories at Cushing, Oklahoma -- the delivery point of the New York Mercantile Exchange (NYMEX) crude oil futures contracts--could climb further, according to industry analysts. This is due to the unrelenting contango on the front of the NYMEX crude futures curve, which has made storing barrels economical. Contango is the industry vernacular for the condition whereby prices for nearby delivery are lower than prices for future-month delivery.
"There is a glut of crude at Cushing so there is no reason for a sustained narrowing of the contango now," Brad Samples, commodity analyst at Summit Energy told Platts. The March/April contango averaged minus $6.33 per barrel last week.
While analysts expect crude stocks to climb 3.5 million barrels, they anticipate a slight drop in crude imports as the global recession continues to take a toll on energy consumption. However, declining refinery runs will likely continue to support a sizeable crude build.
"This week's report will likely show a further decline in refinery activity but with declines slowing from the prior week's sharp drops," Jim Ritterbusch, independent energy consultant said in a report. Refinery utilization is expected to inch down 0.25 percentage points to 81.35%, based on last week's EIA report, as further seasonal refinery maintenance is reflected in the numbers.
In addition, "Refineries are having a difficult time keeping utilization rates high with the current credit and demand environment," Samples said.
Analysts project a draw in gasoline stocks of one million barrels and a draw in distillate inventories of 1.5 million barrels.
"The draws might be bullish for gasoline and neutral for distillates as we have a glut of distillates but tight gasoline inventories. Seasonally, the 5-year average for gasoline calls for a 1.3 million barrel build rather than a draw," Timothy Evans, analyst at Citi Futures Perspectives, told Platts.
Last week, US implied gasoline demand had turned positive on a four-week moving average against year-ago levels for the first time since the first week of May 2008, an analysis of EIA data showed. Implied demand* is the amount of product that moves through the US distribution system, not actual end consumption.
* In a typical comparison of commodity prices for current deliver versus future delivery, it's natural to assume that with each passing month the price would be higher to reflect the costs of storing the commodity as well as the cost of money for loss opportunity costs and other factors. In oil, such a price pattern is called contango. The opposite pattern in oil, where nearby prices are higher than those for future-month delivery is known as backwardation.
* Implied demand is a calculation based on imports/exports, plus production, plus the change in inventory levels.